AIG 2005 Annual Report Download - page 140

Notes to Consolidated Financial Statements Continued
AIG’s current management of these operations. Information for
1. Summary of Significant Accounting Policies
years prior to 2004 included herein has been reclassified to
Continued
show AIG’s results of operations and financial position on a
coverage within a contract. The effective date of the comparable basis with the 2004 presentation. These segments
implementation guidance is January 1, 2007. AIG is currently and their respective operations are as follows:
assessing the effect of implementing this guidance.
On February 16, 2006, the FASB issued FAS No. 155, General Insurance: AIG’s General Insurance subsidiaries are
‘‘Accounting for Certain Hybrid Financial Instruments’’ multiple line companies writing substantially all lines of
(FAS 155), an amendment of FAS 140 and FAS 133. FAS 155 property and casualty insurance both domestically and abroad.
permits the Company to elect to measure any hybrid financial AIG’s principal General Insurance operations are as follows:
instrument at fair value (with changes in fair value recognized DBG writes substantially all classes of business insurance in
in earnings) if the hybrid instrument contains an embedded the U.S. and Canada, accepting such business mainly from
derivative that would otherwise be required to be bifurcated insurance brokers.
and accounted for separately under FAS 133. The election to Transatlantic Holdings, Inc. (Transatlantic) subsidiaries offer
measure the hybrid instrument at fair value is made on an reinsurance capacity on both a treaty and facultative basis both
instrument-by-instrument basis and is irrevocable. FAS 155 will in the U.S. and abroad. Transatlantic structures programs for a
be effective for all instruments acquired, issued, or subject to a full range of property and casualty products with an emphasis
remeasurement event occurring after the beginning of the on specialty risks.
AIG’s fiscal year that begins after September 15, 2006, with AIG’s Personal Lines operations provide automobile insur-
earlier adoption permitted as of the beginning of 2006, ance through AIG Direct, the mass marketing operation of
provided that financial statements for any interim period of AIG, Agency Auto Division and 21st Century Insurance
that fiscal year have not been issued. AIG has not yet decided Group (21st Century), as well as a broad range of coverages for
whether it will early adopt FAS 155 effective January 1, 2006, high net-worth individuals through the AIG Private Client
and is assessing the effect of this change in accounting. Group.
Mortgage Guaranty operations provide guaranty insurance
(hh) Restatements: AIG has completed two restatements of its primarily on conventional first mortgage loans on single family
financial statements (the Restatements). In connection with dwellings and condominiums.
the first restatement (the First Restatement) included in the AIG’s Foreign General Insurance group accepts risks prima-
Annual Report on Form 10-K for the year ended December 31, rily underwritten through American International Underwriters
2004 filed on May 31, 2005, AIG restated its consolidated (AIU), a marketing unit consisting of wholly owned agencies
financial statements and financial statement schedules for the and insurance companies. The Foreign General Insurance
years ended December 31, 2003, 2002, 2001 and 2000, the group also includes business written by AIG’s foreign-based
quarters ended March 31, June 30 and September 30, 2004 and insurance subsidiaries. The Foreign General Insurance group
2003 and the quarter ended December 31, 2003. In the second uses various marketing methods to write both business and
restatement (the Second Restatement) included in the Annual consumer lines insurance with certain refinements for local
Report on Form 10-K/A for the year ended December 31, 2004 laws, customs and needs. AIU operates in Asia, the Pacific
filed on March 16, 2006, AIG restated its consolidated Rim, the United Kingdom, Europe, Africa, the Middle East
financial statements and financial statement schedules for the and Latin America.
years ended December 31, 2004, 2003 and 2002, along with
Life Insurance & Retirement Services: AIG’s Life Insurance &
2001 and 2000 for purposes of preparation of the Consolidated
Retirement Services subsidiaries offer a wide range of insurance
Financial Data for 2001 and 2000, the quarterly financial
and retirement savings products both domestically and abroad.
information for 2004 and 2003 and the first three quarters of
Insurance-oriented products consist of individual and group
2005. See Note 22 herein. AIG, however, did not amend its
life, payout annuities, endowment and accident and health
quarterly report on Form 10-Q for the quarter ended
policies. Retirement savings products consist of fixed and
September 30, 2005 because the adjustments to the financial
variable annuities.
statements included therein were not material to those
AIG’s principal overseas Life Insurance & Retirement
financial statements. The consolidated financial statements
Services operations are American Life Insurance Company
included in this Annual Report on Form 10-K reflect the
(ALICO), American International Assurance Company, Lim-
Restatements.
ited, together with American International Assurance Com-
pany (Bermuda) Limited (AIA), Nan Shan Life Insurance
2. Segment Information
Company, Ltd. (Nan Shan), The Philippine American Life
In 2003 and prior years, AIG’s operations were conducted by and General Insurance Company (PhilamLife), AIG Edison
its subsidiaries principally through four operating segments: Life Insurance Company (AIG Edison Life) and AIG Star Life
General Insurance, Life Insurance, Financial Services and Insurance Co. Ltd. (AIG Star Life).
Retirement Services & Asset Management. Beginning with the AIG’s principal domestic Life Insurance & Retirement
first quarter of 2004, AIG reports Retirement Services results Services operations are American General Life Insurance
in the same segment as Life Insurance, reflecting the conver- Company (AG Life), The United States Life Insurance
gence of protective financial and retirement products and Company in the City of New York (USLIFE), American
88 AIG m Form 10-K